Want to save more? Analyse your spending pattern

Are you aware of the investment options available in the market? How best can you plan your finances?

What are the crieria for evaluating an investment option?

Are mutual funds profitable investment options? When and how should one buy mutual funds?

In an hour-long chat on rediff.com on Wednesday, financial planning expert Sailesh Multani offered some valuable tips. Here is the transcript:

Sailesh says, Goodafternoon everyone, lets start the chat session

prakash asked, hi sailesh, My salary is 45k , i havea car loan 2 PL and Credit card payments which eats 30 k per month.Sailesh answers, at 2009-10-14 13:00:33hi, i would strongly request you to analyse your spending pattern. You seem to be living on debt - if you have multiple credit cards surrender all except one. Try and spend using cash rather than credit card. Your spending should be on essential items and non-discretionary expenses like eating outside, shopping etc should be reduced. Pay all your bills by cheque rather than credit card. This will ensure that you do not have liabilites. It will take some time ot instill this discipline but that is the only way out of this debt trap
san asked, Dear Shailesh I have retired from my job and have a cash of Rs. 30 lacs from pf/ graduity etc .I already have house and no liability. Where should I invest this money safely to get regular interest at decent rateSailesh answers, hi, i would recommend that you keep aside some money say 5% in cash or liquid funds to meet any contingency. Put aside 10%-15% in equity funds to ensure that a part of your savings continue to grow because inflation will eat into your capital over a period of time. After you have kept aside this portion, invest the balance in debt like bank FD that generates assured and regualr income for you. If your monthly expense are within the regualr income then you can follow the above asset allocation. If you invest the entire 30 lacs in debt and it gives you a return of 6% post tax then your annual income will be Rs. 1,80,000 i.e.Rs. 15,000. ensure that your monthly regular expense are in the range of 10000-12000.
raju asked, hi sailesh,i can invest up to 8000 per month.does chit fund is better or RD. Sailesh answers, hi, i do not have any information about your age, risk profile and investment horizon. If your invesment horizon is 5 years plus and willing to take high risk, I would recommend that you start an SIP in equity funds. if SIP is not your choice, I would prefer RD over chit fund
harshal asked, dear sir i m investing Rs. 6000.00 each inmagnum tax gain (dividen option) and Birla sunlife 96 fund (dividen option). is it worth.Sailesh answers, hi, I recommend Franklin India Taxshield over MAgnum Taxgain
kanchan asked, My consolidated salary is Rs 16000 per month. I have insurence of Rs 32500 per year. My monthly expense is Rs 8000. How can I utilise rest of my salary to maximise yield/return.Sailesh answers, hi, your monthly savings is Rs 8,000. Divide this amount between equity and debt. If you are young and willing to take then give higher allocation to equity and lower to debt and vice versa. Invest via the SIP to ensure that you build in a discipline of regular investing. Small savings over a period of time say 5- 10 years will go a long way in building wealth for you and ensure that you meet your long term goals like retirement
Pankaj asked, Hi, I am 37 yr old with 2 kids(8 & 4 yrs). I can save about Rs3000 per month after all other expenditures. Whaere shoud I invest this money for my kids educationSailesh answers, hi, assuming that your children start higher education at the age of 18 years, you have 10 and 14 years for your children. I would recommend that you invest 70% of your savings into equity funds and balance 30% in safe product like bank FD. Equities can deliver higher return with high risk but it needs time to grow. In your cash you have atleast 10 years for each child. Invest in equity funds via the SIP route. Take help of an honest and competent investment advisor to help you select the mutual fund scheme that best suits your profile
shaz asked, Is it worth to invest in PPF along with Post office (MIS).Please adviseSailesh answers, hi, both are safe and assured return schemes. I always recommend investors to have a portfolio of investment products that should include equity funds/stocks/gold and debt. Invest in line with your age, risk profile and investment horizon. I suggest that you have sepearate portfolio for each investment goal that you have set for yourself.
sashishk asked, hi sailesh, i have around 5 Lakh to invest but I'm not able to devote myself in equity. However I have invested in some of MF. What is ur view about getting that 5 Lakh invested through Sharekhan PMS (Nifty Thrifry)? Sailesh answers, hi, I am not a fan of PMS. I prefer equity funds for taking exposure to equities. If you are looking at investing in NIfty then consider Index funds that are linked to NIFTY. PMS is very high on transaction cost and not as tax efficient as equity mutual funds.
dd asked, hi, i want to invest rs 50000, please suggest me options with medium risk, please tell me how is corporate FD's. should i invest in that Sailesh answers, hi, if you are willing to take moderate risk and if your investment horizon is atleast 2 years then consider Monthly Incomde Plans (MIPs). MIPs typically invest 20% in equity and balance 80% in debt. Corporate FDs are good option if you are looking at relatively low risk instruments and assured income. Please be aware that you study the cash flow and financial of the company before you lend any money to them.
praveen asked, Typically SIPs yield good return in 10year time. Is SIP a good method for 5 year horizon? If so, please suggest some good mutual funds for good return in 3-5year timeline.Sailesh answers, hi, SIPs are definitlely a sound strategy for investing. It builds in a discipline of regualr investing. Typically investors get carried away by the noise and keep deferring their investment decisions. SIPs take away the botheration of market timing. Investment via SIPs should be over longer periods of time to ensure that you invest across the market cycles to benefit from the Rupee Cost Averaging
Arun asked, Hi shilesh, i am 23rs batchelor, i save about 5000 in a month. I want to make short term investment for 6 months and get good profit. what is your suggestion?Sailesh answers, hi, for short term investments upto 6 months I would not recommend any high risk investment like equities. You should look t capital preservation rather than appreciation if your investment horizon is 6 months
Ayan asked, Hi,I would like to invest Rs.50000 for a year with good but safe returns.I had checked the Fixed Deposit schemes being offered by various public sector banks but none are offering interet rates higher than 6-6.5%.What would be my best bet for an investment?Also,what extra value can I get if I invest the same amount for the same period through my father who is a senior citizen?Thank you.Sailesh answers, hi, today the interst rates offered by most banks for one year are in the range of 6.50% to 7%. You can consider investing in fixed deposit scheme form EXIM Bank that fetches 7.75% for one year for Senior Citizens and 8.75% for 2 years. YOu can also consider investing in 9% Senior Citizens Savings Scheme. Contact any SBI branch for the same
drsachink asked, If I earn Rs.100 pm then pl. give the break up for my expense, savings, invest etc. in %(For an ideal situation)Sailesh answers, hi, there is no ideal break up but the thumb rule most invesment advisors follow is that atleast 40%

of your income should be saved.
basetti asked, Dear Sailesh, Iam 43 ready to invest 500000 and suggest where to invest, Iam thinking to invest by purchasing a land of 200

Sqyds or investing in Gold.Sailesh answers, hi, I will not be able to comment on the property but I recommend that you invest in gold. Every investor should have atleast 10% of his portfolio in gold. Gold is a hedge against inflation. It is also the investment which everyone flocks to when the world goes into financial crisis. Inflation is begining to look up. Gold will continue to move up keeping pace with inflation. Dollar too is weakening that will push the gold prices further up.
Anuradha asked, Hi, I would like to know whether it is better to invest in 24

ct gold or Gold EFT's..i heard when i buy and sell 24 ct there is a tax. Does Eft's have any such thing? Sailesh answers, hi, if you are looking at taking exposure to gold then nothing better than the Gold ETFs. The units are held in demat form and hence you do not worry about the storage and safe keeping. Every unit of ETF is back by physical gold. If you sell your gold ETF units after 12 months, the captia l gains if any will be treated as long term and you will be entitle to benfits of indexation. The same for physical gold is 3 years. Its very easy to buy and sell Gold ETFs, similar to buying equity share from the stock exchange
GB asked, Hi

Shailesh....My age is 31...I save approx 35 K per month & have cash worth 8 lacs....I have a son 1 month old I would need to plan for his education in future....plz suggest what my long term options should be??Sailesh answers, hi, givne your age and profile, I would recommend that you make a comprehensive financial plan made for yourself. Besides your sone's higher education and marriage expense, you should also plan for your retirement. The investment plan will tell if your current and future savings will be adequate enough to help you meed your investment goals. Invest in a mix of equity, debt and gold. Invest over long term to take advantage of markets cycles to ensure that you build wealth for yourself by the time you plan to retire
manoj asked, Hi Shilesh, i want to invest 1000

p.m for 3 yrs, where should i invest for good return?Sailesh answers, hi, If would recommend that you invest in a mix of equity and gold if your investment horizon is 3 years. You can ideally invest 50% in equity and balance in gold. Since I do not have the relevant information I can suggest the right investment mix for you, but equity and gold should be ok
NandLal asked, Dear

Sir, my take home salary is Rs. 42000 per month + Rs.12000 from other sources totaling Rs. 54000. I ahve Home Loan EMI Rs. 8100 and Car Loan EMI Rs. 11000. I am investing Rs. 30000 per month in GPF and Rs. 1500/month in ICICI Insurance SCheme. Under these circumestatnces, please advise me the best option of investment.Sailesh answers, hi, i understand that you are not investing in equity. Since you are regularly investing in debt and insurance, I would recommend that you gradually increase your exposure to equity. Start with small amounts, invest in equity funds rather than stocks directly, invest via the SIP route, invest for long term 5-10-15 years. Have a balanced portfolio rather than insurance and debt only
Mano asked, Hi

Sailesh ... I recently got increment ..Planning to Invest .. My investment amount would be around 5000 per month .. Kindly suggest some Good Tax saver scheme ... Sailesh answers, hi, congratulations on your increment. Invest your incremental savings the right way. in the tax saving category you can consider investing in PPF which is safe and gives assured return of 8% p.a. compounded annually. You should also consider allocating a part of your savings in Equity Linked SAvings Schemes (ELSS) to ensure that your average portfolio return moves up. ELSS have the potential to generate higher returns but be aware that it also carries risk associated with stock market investing. In ELSS you can consider schemes like Franklin India Taxshield and Fidelity Tax Advantage
Ritesh asked, I invest X amount in equity market and withdraw after X+(15-30% return).

With this cycle I have regular benifit. Should I invest for longer time or this strategy is fine? Sailesh answers, hi, first decide the expected returns from each asset class. If your expectation is 15% p.a. then anything in excess of 15% should be booked. However, please look at the overall market scenarios and prospects to ensure that you do not miss out on good opportunities. Best is to decide and asset allocation for yourself. say 50% equity and 50% in debt. If equity markets move up and 50% goes up to 60%, then balance your asset allocation by booking the gains of 10%. Please keep in mind the transaction cost and tax implications every time you book profits and balance your asset allocation
getmani asked, Hi Sailesh, I have been Investing through SIP Mode in the following Funds for more than 18

months now. 1. HDFC Top 200 2. DSP BR Top 100 3. Sundaram Select Focus 4. BSL FrontLine Equity 5. Reliance Growth My question is 1. Is this right time to invest in MidCap Funds? Please name best ones. 2. Please comment on the Portfolio I have. 3. Is this right time to Invest in Gold?Sailesh answers, hi, your funds are all good. You can consider adding a dedicated midcap fund like Sundaram Select Midcap. I dont recommend allocation of more than 20% to any midcap fund. As far as gold is concerned, yes this is definitley good time to invest. Inflation is moving up steadily and gold prices would react positively to it. Invest in gold via the Gold ETFs
jimmy asked, Hi sir, My name is Jimmy Fernandez, I am 32

years old, my monthly salary is Rs. 16,000/- as well as my wife who is earning Rs.10,000/- I have three LIC Policy namely (Jeevan Saral  Rs.1,021/- per month, Jeevan Mitra (Triple Cover Endowment)  Rs.4,671/- annually, New Jana Raksh Plan  Rs.10,170/- annually, Mediclaim of Rs.14,000/- annually (my parents, myself, wife and my daughter. I have a Home loan of Rs.4,960/- per month which will be getting over within 1 and half year. I want to invest Rs.1,000/- in ELSS, Rs.1,000/- in Mutual Fund through SIP for my retirement and my daughter's education and marriage, Rs.1,000/- in equity every month regularly and also Rs.1,000/- in PPF. Kindly guide me.Sailesh answers, hi, it is very difficult to analyse your investments on a chat but given your profile and need I would request you to get an investment plan made for yourself with the help of an investment planner. It will help you ascertain if your investment are in the right instruments.
gauravca asked, What

are the crieria for evaluating an investment option? Sailesh answers, hi, for any investment you need to consider your age, time horizon, ability and willingness to take risk and expected return. Higher returns come with higher risk but high risk does not necessarily mean higer return. If you are young and working then your risk taking ability is relatively higher than an individual who is nearing retirement. These should be the starting point to evaluate any investment option
ac asked, i have 25K to invest-should i invest in 2

yr. FD or invest through SIP in mutual fund-investment horizon 2 yrs. Sailesh answers, for 2 years, FD would be more appropriate than an SIP in equity funds which should typically be done with a time frame of atleast 3 years. If you are willing to take risk then invest in MIPs which invest 20% of thwir corpus in equity and balance in debt. Though MIPs have the potential to generate higer returns that may not always be the case
Sailesh says, I

think we have run out of time. I would like to thank you all for participating in the chat. If you have any further queries, please feel free to mail me at : info@personalfn.com